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French state pension fund calls for SRI tenders

The administrators of a new French state pension fund committed to a socially responsible investment approach have completed the second phase of a tendering process aimed at finding asset managers.

The French Pension Reserve Fund (Fonds de Reserve pour les Retraites), which is administered by the government, has sent questionnaires to 137 interested asset management companies in France and other countries, including the US, to assess their ability to manage €16billion ($20bn, £11bn) under 27 mandates. At least some of the mandates will employ principles ‘favouring ... sustainable development ... and corporate governance’, although the steering committee has yet to clarify details.

The government established the fund in 2001 to cover the looming shortfall between contributions paid by existing workers and pensions paid to the retired.

Matt Christensen, executive director of the European Sustainable and Responsible Investment Forum, said the sheer size and duration of the FRR – it is expected to invest more than €130bn over the next 20 years and will not begin using accumulated reserves before 2020 – would stimulate SRI markets in France and elsewhere.

‘We don’t yet know whether all of the fund or just a percentage will be under SRI, and whether stricter criteria will be applied in certain branches of it, but this is the big thing for the SRI community in France,’ he said. ‘It will further legitimize SRI and may even spur the European Union to create some policy around it in terms of how governments should manage their investments.’

Christensen added that an existing national regulation requiring managers of employee savings plans to state their position on SRI ‘bodes well for SRI to be a big part of the reserve fund’, because this regulation may also apply to the FRR. The final selection of fund managers is expected to take place before the summer.

There were 92 retail SRI funds domiciled in France managing assets of €1.5bn as of June 2003, according to Novethic.